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On Monday, CFRA analysts issued a downgrade for Electrolux (ST:ELUXa) AB (ELUXB:SS) (OTC: ELUXY) stock, moving from a Hold to a Sell rating, and sharply reduced the price target from SEK110.00 to SEK56.00. The decision was influenced by a revised earnings forecast and potential geopolitical risks that could affect the company’s financial performance. According to InvestingPro data, the stock has already fallen nearly 19% in the past week, trading near its 52-week low of $12.16. Analysis suggests the stock is currently undervalued, though multiple headwinds persist.
The downgrade was primarily based on the analysts’ assessment of a weaker earnings outlook for Electrolux in the near future. They adjusted their earnings per share (EPS) estimates downward for the next two years, setting the 2025 forecast at SEK5.10, a decrease from the previous SEK9.35, and the 2026 forecast at SEK11.20, down from SEK12.10. While the company wasn’t profitable in the last twelve months, InvestingPro analysis indicates net income is expected to grow this year, with forecasted EPS of $0.85 for 2025. Subscribers can access 10+ additional ProTips and comprehensive financial metrics for deeper analysis.
Electrolux’s exposure to geopolitical risks, particularly the renewed threat of U.S. tariffs, was cited as a significant concern. Although the impact of tariff-related cost inflation was minimal in the first quarter, Electrolux’s management has indicated a "significantly negative" effect from external factors for the remainder of the year, which the analysts believe could put additional pressure on the company’s profit margins.
Additionally, the analysts expressed caution over Electrolux’s pricing flexibility, which they consider to be limited in cost-sensitive categories. This limitation could further hinder the company’s ability to manage margin pressures effectively. This concern is reflected in the company’s weak gross profit margin of 15.63% over the last twelve months, according to InvestingPro data.
A specific point of worry for CFRA was the downgrade of Electrolux’s 2025 outlook for North America from Neutral to Negative. The analysts highlighted that weaker demand and policy uncertainty in this crucial market might negatively impact volume and margin recovery.
The combination of these factors led CFRA to lower their opinion on Electrolux shares to Sell, reflecting concerns over the subdued market outlook and the ongoing challenges the company faces. With a market capitalization of $2.13 billion and a six-month price decline of over 25%, investors seeking detailed analysis can access Electrolux’s comprehensive Pro Research Report, available exclusively on InvestingPro, offering expert insights and advanced metrics for informed decision-making.
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